The trustee liquidating MF Global Holdings Ltd's broker-dealer unit won court permission to distribute $520 million of cash to customers, providing relief to customers whose accounts have been frozen since the futures brokerage went bankrupt. US Bankruptcy Judge Martin Glenn approved the payout at a hearing on Thursday in Manhattan.
Later on Thursday, the company announced J. Randy MacDonald, its global head of retail, was no longer employed. The company said in a US Securities and Exchange Commission filing that MacDonald had "ceased to be employed" and would not receive severance or termination payments. MacDonald was owed $8.9 million in severance, according to a July proxy filing. His departure comes two weeks after MF's chief executive, former New Jersey governor and Goldman Sachs head Jon Corzine, resigned without taking roughly $9 million in severance.
Chief Operating Officer Bradley Abelow, also entitled to about $9 million in severance, is still employed. A spokeswoman for MF Global did not return a call seeking comment on Thursday. MF, which went bankrupt October 31, laid off nearly half its staff, including more than 1,000 employees of the company's broker-dealer unit. The payout approved by Glenn on Thursday represents 60 percent of the $869 million that was frozen since October 31 across commodity customer accounts that contained only cash, bankruptcy trustee James Giddens has said.
Still unclear is the whereabouts of about $600 million of customer funds that have been unaccounted for since MF Global's Chapter 11 filing, and whether MF Global might have improperly mixed customer funds with its own. Independent trader James Meyer, who had several accounts with MF Global totalling about $200,000, said he has "lost faith in the concept of segregated funds," adding that the US Commodity Futures Trading Commission "abdicated its responsibility to" protect commodities traders.
"The mantra in commodities has always been that never in managed futures has a penny been lost because of the strength of segregated accounts," Meyer, 63, told Reuters. "That's no longer a valid slogan." At the court hearing in New York, Glenn set aside objections by some customers who faulted the trustee for not distributing more, and others who complained that they were ineligible to join in the payout. Nothing in the law "requires that all customers receive similar rates of distributions at the same time," he said. Kent Jarrell, a spokesman for the trustee, said after the hearing that about 23,300 customers will be entitled to share in the payout, which is expected to begin by November 21. "A few hundred" accounts would remain frozen, he said.